B.C. to reap most pipeline benefit: study

Northern Gateway, TransMountain projects to benefit B.C. most: study

Christy Clark may want to take note. British Columbia will be the biggest beneficiary of the construction and operation of the Northern Gateway and TransMountain Expansion projects, raking in more than half of the $16.9-billion the two pipelines could contribute to the nation’s gross domestic product over the next 25 years, according to the Canadian Energy Research Institute.

“Much of the pipelines will be running through B.C. and the benefits of the construction and operations of Gateway and TMX will be accruing to British Columbia,” said Dinara Millington, one of the authors of the report.

B.C. will also see the highest employment impact from the construction and operations of the two projects.

In B.C., 136,000 person years of employment will be created — or 58% of all jobs created, primarily in short-term construction jobs but also in operations.

In contrast, Alberta will create 28.6% of the total jobs as a result of the projects, CERI said in the report published Thursday.

Approval of Northern Gateway, which would run from Alberta to Kitimat on the coast, alone would mean high-paid jobs, with almost $3-billion paid out to employees of B.C. over the next 25 years. “This represents 55% of the total $5.1-billion in employee compensation across Canada,” the institute noted.

According to B.C. officials estimates, however, the province would only get 8% of the Northern Gateway revenues while assuming all of the marine risk and much of the land risk, and has insisted on a fairer share of the project’s benefits. Alberta has rejected B.C.’s demand, prompting Ms. Clark, the B.C. premier, to boycott a national energy strategy attended by all provincial leaders in late July.

Alberta stands to gain more than any other province from the development of the pipelines in the form of greater oil sands production, royalty revenues and a surge in indirect employment and economic activity. Alberta is set to gain $585.7-billion from oil sands royalties by 2035, according to CERI estimates.

“The B.C. premier is mixing two different aspects,” said an analyst requesting anonymity. “She is talking about revenue and royalty sharing, whereas they are, by definition, collected for residents of the province where exploration takes place. If you are concerned about environmental risk, collect some kind of toll or risk premium per barrel from shippers or developers. And that money should not be collected for general revenue — it needs to sit there in case something happens.”

If B.C. gets on board with the Northern Gateway pipeline it will receive an estimated $4.7-billion over 25 years, while Alberta would see just under $3-billion in economic benefits. Ontario, which has also expressed concerns about rapid oil sands development, may see $608-million coming its way if the pipeline is built.

The construction of the less contentious TransMountain Pipeline Expansion, which would run from Edmonton to Vancouver, may also prove to be a bounty for B.C., bringing in $4.4-billion for the province, with Alberta taking in $2.4-billion over 25 years.

B.C. will also see more than $1-billion in its coffers in its tax revenues, more than three times than the estimated $300-million received by the Alberta in taxes over 25 years if the two pipelines proceed.

The development of these two and the Keystone XL pipeline to the U.S. south is crucial for landlocked Alberta oil sands producers who have committed billions to ramp up output. Industry estimates suggest oil capacity would rise to 6.2 million barrels per day by 2030, from its current 3.7-million bpd.

But opposition to the pipelines by a whole host of stakeholders including aboriginal groups, environmentalists and some religious authorities, have driven a wedge between the provinces, sparking fears that the oil sands could be stranded.

CERI estimates show producers need all three pipelines to match their rapid production plans.

“If all three pipelines are built, crude supply as forecast will reach pipeline capacity limits around 2021,” the Institute noted. “With only KXL and TMX built, the limits will be reached by 2019, and if KXL is the only pipeline constructed, there will be no excess export capacity by 2018.”

A report published earlier in the week by CERI focused on the overall impact of the development of Canadian oil sands including the construction of pipelines. The institute concluded that Alberta would be the biggest beneficiary of the development.

Almost Done!

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.